Earlier this week, I was lucky to be in the room for a presentation made by Andy Cohen, Co-CEO of Gensler, on driverless cars and their impact on real estate. Frequent readers of my blog know that I am passionate about this topic and friends and family have heard me say countless times that I will be the first person they know to buy an autonomous vehicle.

Andy’s presentation was awesome. I sat near the front of the room, snapping pictures of the presentation on the screen behind him with my phone like a fan at a rock concert. He discussed impacts that I hadn’t thought of and had statistics to support his ideas. This was a change to my typical argument about the topic, which is light on facts and long on opinions.

Some of the facts Andy presented include:

- By 2020, millennials will make up 50% of the workforce (which we already know), but by 2030, that number will grow to 75%.

- There are 260 million cars, motorcycles, and buses in the United States.

- The average utilization of a car in the United States is 5%. Meaning, 95% of the time, it’s parked somewhere, not being used.

- There are 500 million parking spaces throughout the country, and the parking infrastructure covers 3,590 square miles. For some context, this is larger than Delaware and Rhode Island, combined.

- The least reliable part of the car is the driver; 93% of accidents are caused by human error.

Gensler is very focused on how a major shift to driverless cars will impact buildings, their design, and the parking. For example, they are advising clients who are building parking structures now to design them with an eye towards changing needs. If designed properly, parking can be repurposed to a higher use once the need for parking diminishes.

Why would the need for parking diminish? Why wouldn’t it?

First, fewer people will own cars. The cost of point-to-point rides (Uber, Lyft, etc.) will decrease significantly without the driver. This will provide many with a more cost effective means of transportation when you consider the lack of ancillary expenses like car maintenance, auto insurance, and gas.

Also, if a car can park itself, it doesn’t need to be close to the building. This would have a significant impact on the entrance to a building and the traffic flow. Buildings are typically built with the thought of tenants parking their cars and walking into the building. But what if cars simply dropped off the passengers at the front door? Lobbies and driveways would need to be expanded. Gensler is already thinking about these concepts.

Once there is full adoption, cars can drive closer to each other, increasing the capacity of roads and significantly cutting down on traffic. Cars that park themselves also need less space since there is no one getting out of the car, increasing the capacity of the parking lots. Gas stations, many of which are in prime retail locations, will become charging stations. Those charging stations can be in more remote locations, allowing for a higher and better use of the land currently being used by gas stations.

Andy’s estimation is that we will have full adoption within 10 – 12 years. In speaking to Spencer Levy, CBRE’s Americas Head of Research, he thinks it will be longer as there are social considerations that Andy’s presentation didn’t address.

The first wave we will see is with trucks. Last October, a Budweiser delivery was driven 120 miles in Colorado with the “driver” mostly sitting in the back of the cab. This has major implications on supply chain and the cost and speed of moving goods throughout the country. Amazon is actively working on how to make deliveries cheaper and faster by researching self-driving vehicles in addition to drones. Are you betting against them? I’m not.

Either way, it’s coming and it’s going to be a huge disruption to our society and industry. We can either ignore it or embrace it.

I think everyone knows which way I am leaning. Frankly, I am hoping my competitors choose the former. The closing slide of Andy’s presentation read,

“The ripple effects of self-driving cars will require the entire real estate industry to undergo a large-scale reimagination of how it allocates space. In commercial real estate, spaces currently predicated on the automobile will be converted to other uses.”

Jeremy Neuer is a Executive Vice President with CBRE in the Saddle Brook, NJ office. After a 19-years as a successful office leasing broker, he transitioned to Capital Markets in mid-2017. He is part of the Suburban New York Capital Markets Team that specializes in the sale of office, industrial, retail and multi-family assets.